I'll begin the call with a review of the second quarter financial results. Simon will follow with a discussion of the current state of our business. We'll then open the call for questions.

Certain of our comments today will include forward-looking statements regarding future events and our projections of the financial performance of the company based on our current expectations. These comments are subject to significant risks and uncertainties that could cause our actual results to differ materially from those expressed in these forward-looking statements. We refer you to the documents QLogic files with the SEC, specifically our most recent Forms 10-K and 10-Q. These documents identify important risk factors that could cause our actual results to differ materially from expectations. We do not intend to update the forward-looking statements that we'll make today.

In our second quarter earnings press release that we showed earlier today, we reported both GAAP and non-GAAP results. All of the references we'll make on our call today relate to non-GAAP results unless otherwise stated. A reconciliation of non-GAAP to GAAP financial measures is available on our website at the Investor Relations.

Turning now to our financial result for the second fiscal quarter ended October 2, 2011. Our revenue in the second quarter was $150.2 million, an increase of 2.5% from the same quarter last year. This revenue approximates the middle point of our guidance range of $147 million to $155 million provided during our first quarter earnings call.

Our second quarter revenue from host products, which are comprised primarily of Fibre Channel, converged and the 10 giga Ethernet adaptors was $105.6 million, an increase 1% from $104.2 million recorded in the second quarter of last year. Second quarter revenue from network products, which are comprised primarily of Fibre Channel and the InfiniBand switches, was $27.8 million, an increase of 2% from $27.2 million recorded in the second quarter of last year.

Our second quarter revenue from silicon products, comprised of Fibre Channel, converged 10 giga Ethernet and iSCSI chips, was $13.9 million, an increase 11% from $12.4 million recorded in the second quarter of last year. Our service and other revenue was $2.9 million.

Our second quarter gross margin of 67.2% improved from 66.8% recorded in the second quarter of last year, primarily due to favorable product mix. Our gross margin exceeded the high end of our guidance range of 66% to 67% provided during our first quarter call, primarily due to favorable product mix.

Next, I'd like to cover our second quarter operating expenses. Total operating expenses were $59.8 million, up 12% from $53.6 million reported in the second quarter of last year. Operating expenses were consistent with our expectation.

Engineering expenses in the second quarter of $34.3 million increased 19% from a year ago, and increased as a percentage of revenue from 19.7% to 22.8%. This increase was related to our planned incremental investment to expand our served market opportunities and drive future revenue growth.

Sales and the marketing expenses in the second quarter were $18.6 million, declined as a percentage of revenue from 12.6% to 12.4%. G&A expenses in the second quarter of $6.9 million were 4.6% of revenue.

Operating profit I the second quarter of $41.1 million was 27.4% of revenue. Interest and other income was $1.1 million in the second quarter. Our income tax rate for the second quarter was 16.8%.

Our second quarter net income of $35.1 million represented a net profit margin of 23.4%. This represents the 65th consecutive quarter of profitability for QLogic.

Our second quarter net income per diluted share of $0.34 was consistent with last year and exceeded the midpoint of our guidance range of $0.30 to $0.36 provided during our first quarter earnings call.

Turning now to our balance sheet. The company's cash and marketable securities were $391 million at the end of the second quarter. We continue to maintain a strong cash position and have no debt.

During the second quarter, we generated $42 million of cash from operations. We remain committed to our stock buyback, and during the quarter, we purchased $42 million of company's common stock.

Receivables were $86.5 million at the end of the second quarter. DSO at the end of second quarter was 52 days, compared to 47 days at end of the first quarter.

Inventory at the end of the second quarter was $23.5 million and decreased from $26 million at the end of the first quarter. Annualized inventory turns for the second quarter improved to 8.4 from 7.5 turns achieved in the first quarter.